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Sharp hike in property sales in past year despite Euribor rise caution
Tuesday, June 21, 2022 @ 5:56 PM

HOME sales and purchases went up by nearly a quarter in the first four months of 2022 based upon the same period the previous year, although April was far less buoyant than March, according to the latest National Statistics Institute (INE) figures.

This is likely to be because of natural caution on the part of buyers after the Eurozone interest rate was lifted for the first time in 11 years, returning to positive numbers after six years and two months below zero.

Despite this momentary shrinkage – about 20% fewer homes sold in April than in March – the INE reveals that pre-owned properties are continuing to sell well, with 26.3% more changing hands year on year in the first third of 2022.

New builds from January to April inclusive were also up on the same period in 2021, with 11.5% more sales.

Overall, the year-on-year increase was 23.1%, even in light of the European Central Bank's (BCE's) announcement that it intended to raise the Euribor and cease buying debt bonds.


April sees 14% rise in pre-owned home purchases

In total, and even with the rate rise, April saw 47,349 residential properties sold in Spain.

This is considerably higher than in the same month last year – 8,788 new builds (18.6% of the total) got new owners in April 2021, meaning the number of homes shifting has gone up by 3.4% in what was the 18th consecutive month of increases in sales.

And although the 38,561 pre-owned homes (81.4% of the total) sold in April this year was the lowest monthly figure since December 2021, it still represented growth of 14% on April 2021.

For both types of property, the increase between April last year and the same month this year was 11.9%.

Anecdotal evidence suggests that a lean April is not uncommon, with potential buyers, particularly holiday home owners, tending to start their property searches in summer.

As yet, data are not available for May, meaning April 2022 is the most recent full month on record.

According to the INE, approximately seven in 10 residential properties sold in April – 69.7%, in fact – were bought by physical persons, rather than companies or large investors.


Spring homebuying fever hits the islands: Sales up by a third 

The greatest year-on-year rise in homes bought in April was seen in the Balearic Islands, with four sold for every three in the same month in 2021 – a hike of 33.3%.

Almost as popular, the Canary Islands were not far behind, showing a 31% increase in sales, followed by the centre-northern region of Castilla y León, with home purchases up by just under 20%.

Inland regions reported the greatest fall in sales in April 2022 compared with April 2021 – the Madrid area being the second-hardest hit, with a drop of 2.7%, but considerably less than the plummeting figures in the northern region of La Rioja, where purchases were down nearly 10%.

The land-locked western region of Extremadura saw the third-greatest fall in transactions, at 2.4%.

Mainland coastal regions were midway between the two extremes.


What's happening with the Euribor

Homes bought outright in cash are not affected by the Euribor, or Eurozone interest rate, which is used for calculating mortgages in Spain.

These have been in freefall since 2011, and first dipped into negative figures in February 2016 – a scenario never seen before in the history of the common currency and which even led homeowners to question whether their banks would start refunding them, rather than the borrower paying interest on the capital owed.

Clearly, this was never going to be the case, and lenders normally set their mortgage rates at the Euribor plus X% - typically between 1% and 3% - meaning they would always be charging more than purely the capital repayment.

But it proved a welcome breather for homeowners after the 'boom years', when the rate had been climbing constantly, breaking historic-high records, and peaking at around 5.6% in early 2008.

The BCE has been maintaining the below-zero rates, and continually dropping or freezing them, to help stimulate monetary circulation in the common currency area during the latter years of the financial crisis and, more recently, during the pandemic; now, however, with price-led inflation across the continent, its strategy has reversed.



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